Lessons from my mistakes

By Neil Davidson
Business of Software Conference 2007

They say that a wise man learns from other people’s mistakes. I’ve always found it easier to learn from my own. They’re more personal, and the lessons are clearer. It’s one thing to read that cash flow that kills a business, it’s another being unable to pay salaries because a customer won’t pay. It’s one thing to read that employment contracts are important, it’s another to be sued by an employee you’ve fired whose contract you cobbled together yourself to save a few dollars. It’s one thing to be told to listen to your customers, it’s another to launch a product and watch it flop because nobody wants it.

I do, however, try to understand my mistakes after I’ve made them. Often the lesson is obvious, but sometimes it’s more subtle. Occasionally I come across a blog entry or a paragraph in a book that helps me understand, deeply and with clarity, why what I did was so dumb. It gives me the information I need to interpret my mistakes and to learn from them. Even more rarely – once or twice a year maybe – I come across a person or a book that streams those insights out, sentence after sentence or page after page.

What does this have to do with Micro ISVs? Eight years ago, Simon Galbraith and I set up Red Gate Software. Since then, we’ve grown from 2 people in a bedroom to just under one hundred people. We’ve been profitable almost all that time. We were what I’d consider a Micro ISV for a lot of that journey. I’ve made all the mistakes at the beginning of this post, and more. The mistakes I’ve made aren’t unusual. Everybody makes similar ones starting out in the software business. I have, however, been lucky enough to stumble across a number of people who’ve helped me learn from some of my mistakes.

Here are a couple of examples. The second developer we ever hired was mediocre. After much hesitation, we fired him. In Peopleware, Tim Lister explains how a hot-shot developer is orders of magnitude better than a mediocre one. Even if he costs twice as much, you’re getting 1000 times more so it’s worth it. It just doesn’t make sense to hire mediocre developers. This is something I’ve always known, but until I made the mistake and read Tim’s book I didn’t truly understand it. More recently, we tried to give our developers performance related bonuses. That was a messy and expensive disaster. Before we tried it, I knew the theoretical pros and cons, but until I’d made the mistake and Tim explained why, that knowledge was useless theory.

Jeff Pfeffer’s book Hard Facts, Dangerous Half-Truths and Total Nonsense gives more insights into performance related pay. Not only does Jeff demonstrate that performance related pay doesn’t work, but he also shows that much conventional wisdom is simply wrong. With his help, I took my specific, first-hand, failure implementing performance related pay and turned it into a general rule about conventional wisdom.

Whether you’re a Micro ISV or Microsoft, Tim and Jeff are but two of the people you should listen to. I’ve put together a conference where Tim, Jeff and some of the other world-class thinkers, writers and doers I’ve come across will be speaking. You should go. You can find out more at www.businessofsoftware.org.

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Bob WalshLessons from my mistakes

This week’s show: Mike Rohde, design guru

This week’s The MicroISV Show podcast is up: Mike Rohde, microISV-friendly graphic designer, was kind enough to come on the show and talk about what microISVs need to understand about his world.

Disclosure: I’ve hired Mike to work on a project for me, kind of like what Ian Landsman and Mike did a while back: believe me, I take what Mike has to say seriously!

[tags]microISV, The MicroISV Show, Mike Rohde[/tags]

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Bob WalshThis week’s show: Mike Rohde, design guru

Three different ways to succeed

[Editor’s Note: For the past 17 weeks Dave Collins, noted UK microISV marketing expert, has been kind enough to share his knowledge, insight and experience here on getting the most value from Google AdWords and marketing. This is the last post in that series. Thanks again Dave!]

By Dave Collins
Founder, Shareware Promotions

The recent Google AdWords Q and A seemed to go down very well. So we thought we’d carry on riding the interactive wave, this time sending our own questions to three very different software companies that we’ve had the pleasure of working with.

Each of the three companies I selected sell their software to very different markets. The only thing that they really have in common are that all three have made use of our company’s services for many years now, and that all three are by any standards extremely successful.

I should also point out that I asked the three individuals not to plug our company or services in any way. Their answers make very interesting reading, and we had no wish to hijack this and turn it into a SharewarePromotions Propaganda Special. Not this time anyway.

The three companies are, in alphabetical order:

MJT Net Ltd – www.mjtnet.com – Marcus Tettmar.

NotePage, Inc. – www.notepage.net – Sharon Housley.

Paessler AG – www.paessler.com – Dirk Paessler.

I’d like to thank Marcus, Sharon and Dirk for taking the time to send such detailed responses. I’ll let them introduce themselves below.

Question: Can you please introduce yourselves?

Dirk Paessler:

My name is Dirk Paessler. In 1996 I founded the company that eventually became Paessler AG. We sell network monitoring and testing software for the Windows platform. Customers are small, medium and large companies from all industries and from around the world, e.g. 70% of the fortune 100 are our customers. Currently more than 100,000 installations of our products are active.

Marcus Tettmar:

I’m Marcus Tettmar, founder of MJT Net Ltd, developer of Macro Scheduler, a Windows automation tool. Macro Scheduler was originally launched 10 years ago in May 1997. Since then we have continued to develop Macro Scheduler and accompanying products, specialising in software automation tools for Windows. Macro Scheduler is now at version 9.1 and is selling better than ever. Our aim is to build tools that will let people automate any software process, with minimal skills, and recently launched AppNavigator which allows people to build image recognition based automation routines graphically without writing any code.

Sharon Housley:

My name is Sharon Housley and I manage all the marketing for NotePage, Inc. I am responsible for the marketing and brand development for the NotePage product line, the FeedForAll product line and the RecordForAll product lines. The NotePage product line is focussed on wireless, SMS and text messaging solutions. The FeedForAll product line centers on RSS and podcasting solutions and our newest product line RecordForAll is for audio recording. I have been involved in the computer industry since 1989 and I have been marketing online since 1996.

Question: If you had to point to three factors that were responsible or partly responsible for your company’s success, what would they be?


– The “(Don’t-call-it) Shareware-Concept”. In the early days it was called shareware, today even Microsoft sell software via trial versions and offers purchase through the Web. But most businesses do not use the term anymore, as it is associated with small, non professional companies and products.

The key point, however, is that the concept and companies adopting the model have grown into maturity! The principles are still the same: Don’t ship boxes. Don’t run expensive print-advertising. Offer free versions. Make trial versions so good that people will give you money for the real thing. Offer great value for the money. Stay close to your customers with your sales and support staff, and develop what they are looking for.

– Google Adwords and SEO: They are our main customer acquisition tools.
The perfect solution for niche products in a global marketplace.

– Be professional and be kind: The customer is king. Better to give some customers a little too much than all customers too little.


i) Having a great product that people need, and know they need! Getting the product right is a good start and having one that sells itself, with obvious benefits, makes life easy. We have a product that people come looking for. Macro Scheduler practically sells itself.

In contrast I think many products suffer because until you use them you don’t know you need them. We’ve released products like this too and been unsuccessful with them because you need to educate people into knowing they want them. It’s far easier to sell solutions to problems people know they have already!

ii) A loyal, evangelical customer base. And listening to it. I guess if you get the product right this one will follow. A big strength of ours is our active forum and user community. We just sew the seed with version 1 of Macro Scheduler. Subsequent growth is a direct result of user involvement. A big part of Macro Scheduler is it’s scripting language.

And, as any developer will know, languages and other technical products benefit from end-user discussion and knowledge sharing. So a user forum is both necessary for our product and also extremely beneficial. Our customer base has become a feature of the product, a component of its marketing and a function of our website. It is integral to our success.

iii) Passion and lots and lots of hard work. I gave up the day job almost immediately after launching the product. I don’t understand the philosophy I keep reading in the forums that you can run a software business “on the side” to make some extra cash. As far as I am concerned you’re in it to win it, or not at all. There’s no substitute for hard graft. Most businesses require long hours at the outset, and if you want to be successful you have to keep the momentum going even ten years later. Contrary to what some people believe this business doesn’t run itself!


Wow, there were so many factors that led to our success. I’m not sure which three I should talk about. I think the biggest factor was adaptability. Our initial vision of what the company would be is very different from what the company is today, and along the way we needed to adapt our software, marketing and the way we managed things. If we had been inflexible and unwilling to adapt to the changing marketplace and customer needs I don’t think we would have been as successful.

I think building on a need was critical to our success. We developed software that we needed, this was a good indicator that others might need the same solution. Sprinkle in a little bit of luck and voila, we became a successful software company.

Question: What would you say are your company’s most valuable assets?


That is a difficult question to answer. My first reaction was to say my staff, then I realized in the past 11 years we have developed a strong reputation (brand), quality software, multiple product lines and a large customer base. Each of these are assets, I guess my specific answer would depend on the context of the question.

If we were selling the company, invariably the intellectual property would be the most valuable asset. If I were starting over, I would say my staff is my most valuable asset.


It may not be too nice to call them assets, but it is the people that run this company with me.


Our customers. And me, of course! The intellectual property of our products is worth something too, but that only depends on who wants to buy it and how much it is worth to them at the time. It may sound arrogant, but the product and company wouldn’t be what it is without the guy behind it, so I’d say right now I’m the real value in the company. This is probably the case for most small businesses. Only when a business is a certain, more faceless, size, will this change. Right now, I _am_ the business. But as far as we are concerned, our best asset, in terms of value to us, is our customer base. The product wouldn’t exist without them.

Question: What advice would you offer the small software company thinking about taking the next step, and turning their part-time product/s into a full-time business?


Assuming you already have a product and it is selling well, just go for it.

I’m convinced you will benefit from going full time and having more time to spend on the business. A part time business doesn’t have the room it needs to grow.

Spend every day doing something marketing related. Stop tweaking the product and adding new features for a bit. That’s the easy part.

You need to spend most of your time marketing, be that SEO, managing your Adwords account, writing content for your website, writing press releases, sending newsletters to your customers, working with your marketing company, hanging out in forums related to your software or making partnerships, etc.

Don’t do everything yourself and don’t be cheap. Recognise when you need help with something and find someone skilled in that to do it for you.

If you don’t have a product yet, or it isn’t selling well, think about your skills and experience. Find a niche, something you have expertise in, and find a bit of the long tail to own. These days there’s not much point in releasing another text editor, antivirus tool or CD burning utility.


Moving a software business from part-time to full-time takes a lot of self discipline; there is no clock to punch.

If you are working from home you need to strike a balance between work and play.

While being self-employed offers a great deal of freedom to set your own hours, it is important that you find time for your family and personal interests while still working to develop your company. Initially this can be difficult to accomplish, and if your family members are not involved in the business they might not understand the time commitments. Be firm and create structure if you need to.

If you work with family members remember to set work aside and not let it consume your life 24/7.

And finally, setting up a business can be very unpredictable. It’s a good idea to have a nest egg, so that you can give your business a fair chance to develop into a full-time income.


Grow-as-you-go and grow-slow. Paessler was started as a home and part time business and has grown into a company with a staff of 15 in ten years. No external capital, no bank loans. We simply reinvest most of the profits into the company.

Question: What would you say are the three most common mistakes that software companies make?


– Don’t underestimate the importance of a good look. Hire a graphic designer to make your software (and website and everything else) look great and different from the competition. Try www.elance.com for a cheap start!

– Stop trying to do everything yourself; especially if you are not good at it. From the early days of the business we hired companies to do the software archive submissions, SEO, Google Adwords management, website shop and press relations for us. This allowed us to concentrate on the products and the customers.

– Never stop innovation and improvement. Even if you have a product that sells well today, don’t stop what you’re doing and don’t get too comfortable! Start developing the next big hit while existing revenues are coming in. Even your top selling product won’t sell forever.


i) Trying to sell features rather than benefits. Or worse, not trying to sell anything. I clicked through to a software company website from a sig in a forum the other day to be greeted with some kind of mission statement.

Nothing on their front page told me what they did, or more importantly, what they could do for me.

ii) Undervaluing their products. If your software solves a real problem people will pay a lot more than $20 for it!

iii) Being too cheap and thinking they can do everything themselves. I see this all the time in the software forums. People don’t seem to be prepared to invest in their business. Instead of paying an expert to do something properly, be it write a press release, design an icon or help with marketing, they seem to begrudge the cost and think they are better off doing it themselves. Wrong! Recognise your weaknesses as well as your strengths. Your time is worth money. Don’t waste it. Pay someone who knows what they are doing instead.


a. Tech Talk – Developers tend to market their software using tech talk, rather than promoting their software’s benefits. Customers often don’t understand what the software does and developers struggle to explain it in simple terms.

b. Don’t Listen – Some software developers think that they know what is best and they don’t always listen to feature suggestions from customers. They don’t look for patterns in support queries, and often assume their customers are all stupid.

Software developers really need to listen to what their customers are saying and even more importantly, listen to what they are not saying! The best software is easy to use, and I do think that software developers sometimes forget that. Developers load their software with so many bells and whistles, the feature creep has the tendency to over-complicate software. Software should be easy to use, and not be overly complicated. The bottom line is that the best developers listen to their customers.

c. Design with Support in Mind – When designing software thought should be given to support. What types of support issues do you expect, and how can you minimize them? I think developers tend to think of support as an afterthought. If an application is designed with support in mind, many support issues can be designed out of the software from the outset. The company stands a better chance to succeed if support is considered as part of the design process.

Question: What would you do differently the second time around?


I have never really thought about it, I don’t know that I would change anything. That isn’t to say that we haven’t made mistakes along the way, we definitely have, but we’ve learned a lot from them and learning from a small mistake is better than learning from a big one. So I’ll keep my mistakes just the way they are. :-)


Turn the part-time business into a full-time business earlier.


For a long time I didn’t send out regular newsletters to my customers. I guess I was worried about appearing to send spam, or just too shy or something. Now I try to send a monthly newsletter. The benefits are enormous. People appreciate the information and each newsletter generates sales. People want to buy your software and existing customers want to support you and upgrade, but you need to remind them you are there. You don’t need to send pushy sales letters. Just remind them you’re there and you can help them. It makes a big difference.

Likewise, I regret not asking for an email address on the download page sooner. We now ask people to provide their email address when they download. It is entirely optional.

Not everyone provides an email address, but many do. We send follow-ups to those that do with links to tutorials and other helpful information. People thank us for this and it increases the conversion rate. I should have done this 10 years ago.

Question: If you had the time, inclination and funds, what technologies would you choose to invest in today?

Marcus Tettmar:

Maritime satellite broadband! Seriously. It’s still too expensive and too slow.

I don’t need to spend money to invest in automation technologies because that’s what we do 😉 But automating the business as much as possible has been essential. For me, mobile technologies are important as I do a lot of sailing, and don’t like to be tied to the office. 10 years ago it was a brick-like mobile phone wired to a laptop with 9600 baud, but more recently a Blackberry – what a difference! Things have certainly got easier and faster. Coupling automation with mobile technologies has allowed me to run my business from anywhere, including while sailing, and no one notices the difference.


Are you offering me a bundle of money? :-) I like to have my hand in a lot of things, so we’re always playing with new ideas and testing different markets and models. I have never been a big risk taker, but I think a number of markets are solid and developing fast. I think personal search has potential, as well as attention data. I think social bookmarking will become a component of search, meaning the larger search engines will use it in their algorithm for organic search results. The subscription model is gaining traction, and the right type of products have potential. I think the model introduced last summer by TrialPay is quite interesting and shows some real promise. As far as offline investments I think alternative energy and green energy is a no-brainer, and a solid investment.


Do you really think I would tell you here? :-) Invite me for a quiet beer and something nice to eat and we can talk!

Question: What worries keep you awake at night?


My little 4 month old daughter (well, only some nights actually). YOU definitely know what I mean. [Note from Dave: I also have a four month old daughter, so most *definitely* know what Dirk means!]


Worries? I have an 11 month old son, Ben, and a busy business, both of which ensure that when my head hits the pillow I’m out like a light.

Occasionally Ben wakes us up, but that’s very rare. So not much will keep me awake these days! If something is bothering me and needs fixing I’ll usually sort it out before I call it a day so that I am not kept awake thinking about it. But if I had to think of anything that concerns me most it would be ensuring that customers get the best possible support. I worry when a customer hasn’t had a response to a query, or when I can’t think of a solution to an unusual technical support problem. I make it my priority to find a solution for my customer and won’t rest until it is solved.


I am assuming that you are asking in the context of being self -employed and are not the least bit curious about my personality quirks 😉 Business worries really do not keep me up. We have developed a healthy income from multiple product lines and the business has matured and grown. We do not live hand to mouth, so many of the concerns that newer developers have are no longer an issue. We have reliable staff that have been with us for a number of years, so I do not feel solely responsible for everything that happens. We have put redundant systems in place so that everyone has coverage and backup, if the need arises. Just having redundancy in place, and being able to take an occasional vacation has made it a whole lot easier to sleep at night.

Question: Anything else that you’d like to share?


There are very few industries that afford people the luxury of flexible schedules and offer the opportunities that software does. Treasure the opportunity that you have been given.


I am all out of ideas!


Hmmm ….


Dave Collins is the CEO of SharewarePromotions http://www.sharewarepromotions.com, a well established UK-based software marketing company. Dave specialises in Google AdWords, Log Analysis, Online Marketing and Delegation.

[tags] Dave Collins, Google AdWrods, microISV, marketing[/tags]

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Bob WalshThree different ways to succeed

Marc Andreessen has a blog you need to follow.

Yes, that Marc Andreessen, the cofounder of Netscape, now has started a blog (http://blog.pmarca.com) you’re going to want to track. For instance, Marc has started a few days ago a multipost series on what VC funded startups really like (part one and part two), wrapped up a three parter on the lowdown on VCs a couple of weeks ago and promises a post soon, “Top 10 ways to do personal outsourcing”.

Now just why should you devote some of your (hopefully) limited blog browsing time to this Marc guy who made his rep (and the cover of Time) way back in the last decade?

My specific experience is from three companies I have co-founded: Netscape, sold to America Online in 1998 for $4.2 billion; Opsware (formerly Loudcloud), a public software company with an approximately $1 billion market cap; and now Ning, a new, private consumer Internet company.

That’s why.

[tags]Marc Andreessen, pmarca[/tags]

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Bob WalshMarc Andreessen has a blog you need to follow.

MicroISVs aren’t just software startups

I came across CritBuns reading one of my favorite bloggers, Seth Godin. In a nutshell, it’s a cool seat cushion. What makes this interesting to me – besides spending nearly all of my waking moments sitting – is that Joe Gibbia is a microISV by another name:

“I began to develop the product’s identity, package design, and marketing plan. I filed the intellectual property, stored a small inventory in my basement, and began making sales calls to any store that would listen. I was a recent grad with high ambition, and was thirsty for the real world education unfolding before me. I met it head on – the first few stores flat out rejected CritBuns. I dug down, and continued on. Finally, a small boutique in Providence, RI agreed to carry CritBuns. They only ordered 4, but I didn’t care – CritBuns had now progressed from an idea, to a sketch, to a product on a shelf. The momentum continued, with new stores added each month. You can check the latest stores here on the site.”

MicroISVs aren’t limited to software. The economic model we call being a microISV now works for everything from software to online information services, to games, music, clothes and yes, physical products like seat cushions.

So why do people today have to spend their most productive years in stifling corporate cubicles when they can – alone or with a few partners – build global businesses selling world class products and providing great customer experiences? I missed the memo on that one…


[tags]microISV, CritBuns[/tags]

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Bob WalshMicroISVs aren’t just software startups

A blogging we should go…

Zviki Cohen, a microISV in startup mode, was kind enough to drop me a line about his new blog and a post he did outlining another microISV’s tactics for success: Xoreax Software (makers of a very useful C++ distributed compilation tool, IncrediBuild. Zviki’s post (and email to me) are excellent example that:

  • You don’t have to solve global warming in 500 words to do an interesting post – just write about something – or someone – you know interesting to your target audience.
  • Bullet lists, outlines and concise sentences make for a good post – his outline of what the Xoreax did to get their microISV started is to the point.
  • MicroISVs can thrive anywhere there’s electricity and broadband – don’t think for a minute that you have to live in the U.S., U.K. or Europe. Both Zviki and Uri Mishol, the CEO and co-founder of Xoreax happen to live in Israel. They could have be in Iceland or Peru for that matter: we all face many of the same problems in our second country of choice: the Internet.
  • Reach out to fellow microISV bloggers. Zviki sent me a short, friendly email – otherwise I might not have seen this post I’m recommending to you.

[tags]microISV, microISV blogging[/tags]

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Bob WalshA blogging we should go…

Google AdWords Q & A

By Dave Collins
Founder, Shareware Promotions

This article is a little out of the ordinary. A few months ago we put out a call for Google AdWords related questions, and after a few days of near silence, the tide switched and we were drowning in them.

We tried to choose the questions that we felt would be of most interest to the greatest number of people, but obviously couldn’t include every one.

And to spice things up a little, we have two qualified AdWords Professionals answering the questions! I myself have been AdWords Qualified for around two years, and our very own Aaron Weiner also recently qualified, thereby achieving Qualified Company status for our company.

Whether you’re new to the murky world of AdWords or a hardened, grizzled veteran, there should be something here for everyone.


Question: My website already ranks well in natural search results, without my having to pay. Why should I bother with AdWords? Wouldn’t doing so be a waste of my money?

— Unsigned

Dave: So-called natural search results are great, if or when you can get them. But there are still plenty of important reasons for sticking with AdWords. Here are five to get you started.

1 – AdWords gives you control. You decide exactly what is displayed, where it’s displayed, when it’s displayed, on which networks, how much you’re prepared to pay for it and where the visitor is taken when they click your ad.

2 – AdWords gives you speed. Getting new (or old) content indexed by the search engines can be a thankless task, sometimes even impossible. New websites may even take twelve months or longer to rank in the search results. AdWords, on the other hand, gets you up and running in minutes.

3 – Your high-ranking natural results position may have disappeared entirely by tomorrow. Not running AdWords would mean that your Google traffic vanishes overnight.

4 – Your ranking in the natural search results will vary widely, according to geographical location, language, browser and personal preferences. If you’re serious about wanting to sell to the world, you need to make sure that you reach them. And stay in control.

5 – If AdWords doesn’t work then your ads won’t be clicked. If they don’t get clicked, you won’t be charged. And never forget that if your ad isn’t there, they’ll be clicking on your competition.

Aaron: If you want your AdWords ad to be in first place, you are in complete control. You pick the keyword, the price you’re prepared to pay and you write the exact ad text, which should be far more captivating then a natural search result listing.

If, on the other hand, you want your natural search results to be in top position, this is no easy task. Natural search results are based on a large number of factors, including website content, how your page ranks amongst other pages with similar content, link popularity and more. You may also enjoy a top position which drives large amounts of traffic to your site, only to have it vanish without warning when Google update their index and ranking algorithms. Working yourself back to the top can be somewhere between extremely difficult and impossible. AdWords can be a more cost-effective route to the top.

Also don’t forget that Google want their visitors to click on the ads. A lot of time and money has been spent on making sure that they’re clicked, including highlighting some of the top performing ads with a (new) different colour background and putting them at the very top of the page.


Question: How do you decide which ads to keep and which to delete? Do you decide based on the CTR * conversion rate, or something else?

Andy Brice – http://www.perfecttableplan.com

Dave: The blessing of AdWords is that you have so much information at your disposal. The curse of AdWords is that you have too much information at your disposal.

The classic mistake is to choose the low performers based on CTR alone. This is considerably less than half the equation.

You need to take into account the ad’s CTR, how it converts, how much you pay for it, and what else the visitor to your site may do after clicking the ad. Once you factor in the keyword’s impact on the equation as well, you start drowning in data at an alarming rate.

Realistically, your decision should be based on a limited number of factors. I usually look at visitor behaviour once the ad is clicked, the cost of bringing them in, CTR and cost per conversion.

I did try to work this out as a weighted formula but I think I passed out (or fell asleep) while trying.

Also don’t forget that your ad isn’t shown in isolation. Behavioural patterns change with time, as do the ads of your competition. So what works today may not tomorrow.

Aaron: In an ideal world, a successful ad is one that sends the most visitors to your website, at a very low price, who then purchase your products,. Measuring or achieving that is very difficult. A high click through rate does not necessarily mean a successful ad. For example, if your ad says, “free plasma TV”, I suspect that your click through rate would be extremely high for all the wrong reasons. Unless, that is, you actually giving away free plasma TVs. If you are, please contact me. [Or better still Dave].

As for working with the conversion rates, Google’s conversion tracking is extremely limited. For example, the person who clicked on your ad and downloaded the product may not be the person who makes the purchase. And even assuming that the downloader and purchaser are the same, Google’s conversion tracking is little more than a fairly basic cookie system. If the cookie cannot be set, the conversion occurs after 30 days of the ad click or the cookies is deleted, then the conversion is not counted.

You might argue that some data is better than none. But how do you know how accurate it is? Is their system catching 40% of the conversions or 90%?

Personally I like to compare the AdWords ad results against web logs. For example I check to see if traffic from the ads is venturing on throughout the website or exiting upon arrival.

It’s also important to remember that this is an ongoing process. Not only will you never have a perfect ad [unless Dave creates it], but you also need to constantly create new ads and delete those that don’t perform well.


Question: I have an AdWords account that has languished, because I haven’t been willing to spend the time on it. I’m pretty sure I’m losing money (or more precisely, not making the money I could be) because of it.

I’m about ready to jump back into it, but I’m feeling a little overwhelmed. I’d like to manage my account myself, but I’m worried about the initial set-up – that I don’t have the expertise to do all the fine-level tweaking that could make a difference in setting up successful ads and campaigns.

I’d love to employ your company to set up my campaigns for me, but I don’t think I can afford it. So is there some middle ground available? Where I would set things up to the best of my ability, then have your company review my work and make recommendations?

Sue Pichota – http://www.icons-icons.com

Dave: The short answer is that our AdWords services aren’t cheap, and I can of course appreciate that spending over $1000 a month for an account to be managed may not be realistic for some.

We do, however, offer consultation services, currently priced at US $250 per hour. For most accounts, two or three hours should enough time for us to have a look round and send detailed instructions as to how it can be improved.

Details of our consultation package may be found at the following URL: http://www.sharewarepromotions.com/consultation.html

If you’re going to do the whole thing yourself, a good starting point is to sketch out how your campaigns and ad groups should be structured. Ideally. Once you’ve got a structure and setup you like, you then need to decide whether you can apply the changes to your existing setup, or whether it’s easier to delete everything and start from scratch.

If you’re going to fix what you have, then I strongly recommend using AdWords Editor. Shuffling keywords, moving ads and applying mass changes is infinitely easier and faster than doing so through your web browser.

Aaron: If you prefer to set up your account on your own, I would make the following suggestions:

•    Check out Google’s AdWords learning center.

•    Don’t mix the content network with Google search and search partners.

•    Create more than one ad in each of your ad groups.

•    Track your efforts, but don’t get bogged down in the data.

•    Keep your campaigns, ad groups, keywords, ads and landing pages focused on the target.

•    Don’t let your account work on autopilot.


Question: Lately Google’s been driving me crazy with the “Keyword Inactive for Search” thing. I read all their hints, what goes into the Quality Rating and all the BS I could find on their site. Modified my ads re: their suggestions and for a while all was well.

My prime keyword is “flashcards”. After the modifications above they rated it OK and suggested a minimum bid of .20, which I went with. It had previously been disabled, even though I was bidding .30.

“Great”, I thought, “all this will be worthwhile and even save me a little money”. But NO… within a couple of days “flashcards” was again “Inactive for Search” with a bid of .40 required to turn it on. I queried Google, but they just pointed out that the Quality rating was Poor…. Well, duh, WHY is it poor? I followed all the guidelines. BTW, I have content match turned off across the board.

Dick Bryant – http://www.openwindow.com

Dave: I can’t help but admire the whole concept of Quality Score. It’s little short of brilliant.

The AdWords system involves a careful balance of Google’s two main priorities; relevance and revenue. If enough of Google’s visitors search for a term, click on your ads and stay there, the keyword will be classed as relevant. If, on the other hand, they don’t stay on your site, but instead hit the back button in their browser, you’re classed as less relevant, and so you have to pay more.

Google give you a massive amount of information from within the AdWords account, but there’s also a lot they don’t show you. For example, when people click on your ads, Google know how many of them stay on your website and how many return to Google. They also know how long they spend there before returning.

Wouldn’t that be useful information to have?

The obvious question is why don’t Google provide you with this? Call me a conspiracy theorist if you must, but I don’t think it’s in their interests to. After all, if one of your ads was getting 100 clicks a day at $0.20 per click, and all 100 visitors went back to Google after clicking your ad, would you carry on paying for it?

In your situation, Google have deemed the keyword to have low relevance. Chances are they’re right. You can either set up a landing page that is optimised for this term, decide that the keyword really isn’t a good fit, or keep paying more for the keyword. I don’t recommend the third option.

Aaron: In my experience, whenever I see the “Inactive for search” message, it is usually down to a keyword not fitting the ad group, ads and/or landing page. The keyword “flashcards” is a very broad term. Anyone who searches for “free printable flashcards”, “number flashcards” and many more phrases would see your ads. Is your product relevant to all of them?

In your case, it would appear that Google do not feel that your ads or landing page are relevant to most people searching for “flashcards”. Pay them a little more and they’ll indulge you.

If you’re not prepared to raise your bids, then your only other options are to improve your ads, your landing page or both.


Question: Are results for keywords using Wordtracker as an example, which to me seems to be targeted at Search Engine Optimisation, automatically the best result for adwords?

Peter Muys – http://www.brainstreamer.com

Dave: The idea of services and tools like WordTracker is to find the keywords that people interested in your software are using for the searches. The critical point is that you can’t predict what people may be searching for, but chances are that they’re looking for different phrases than you might expect.

Whether you’re using keyword research for SEO or Google AdWords, these services are ideal. The only real difference is that you’re not as concerned by the “extra” data. All you need are the relevant keywords.

Aaron: I use Wordtracker for AdWords keyword research. While your AdWords account does provide a keyword tool, I find it to be as good as useless. It’s highly inaccurate and often gives a lot of irrelevant results.


Question: I heard Dave Collins speak at the Shareware Convention last year. I remember he said to monitor the Adwords campaigns and that it was a mistake to set them up and not monitor them. The problem I have is that I am monitoring my campaign. But I cannot seem to get definitive data to direct my actions.

For example, I’ll receive reports that indicate one ad outperforms the other ads. So I’ll think maybe I should get rid of the other ads and use the higher performing ad. But then I’ll receive reports showing the higher performing ad performed worse than the other ads. I cannot get consistent data to draw any conclusions.

I also have the same ads going to different landing pages. One week, the ads will perform better with a Google-specific landing page. But on different weeks, the same ad will perform better going to the home page.

Please help! Do you have any suggestions on how to make sense of it and direct my actions to get more consistent data?

Kim Murdock – http://www.magsoftwrx.com

Dave: This is quite a common situation. The trends in your actual data will change on an ongoing basis, as the people searching, their search terms and search behaviour patterns will be in constant flux.

There are a number of steps that you can take to make sense of all the data.

First of all, make sure that you’re looking at a big enough data sample. One day’s data is never enough, and at the very minimum you should be giving your ads and keywords a full week to generate data. Sometimes longer, depend on the volume of impressions and clicks you receive.

Secondly, when you’re looking at data, look in units of seven days (7, 14, 21 etc) so as to make sure you get an accurate sample. Nine days could include one weekend or two, which can have a major impact on what you’re looking at.

Thirdly, make sure that you allow enough time for your changes to really kick in. New ads, for example, can sometimes take a long time to be approved for the content network. Making alterations seven days after adding new ads may not be anywhere near long enough.

Fourthly, don’t alter too much at the same time. If, for example, you log into your account today and add new keywords, new ads, different bids, different budgets and point to new landing pages, you won’t be able to point to the reason for your success or failure in a few weeks’ time. The AdWords system is complicated enough without running in circles, chasing your own tail.

And finally, the murkier the results, the more time you need to look at. A one week pattern may be completely misleading, but if you look at data for the past two or three months, you should get a better idea of what’s working and what isn’t.

Aaron: I think you are going to have a problem finding consistent data. The AdWords traffic is constantly changing. What worked this week, might not work next week or next month. And something that failed this week might actually work next week or next month.

What is important is to always experiment by optimizing what you have. Look at the last 7 days; look at the last 30 days. Purge what is not working and expand on what is working.

It’s also important not to get lost in the data and keep things in perspective.


Question: What percentage of clicks do you think are fraudulent? How much do you think the average small developer spends on wasted clicks?

Sharon Housley – http://www.notepage.net

Dave: This is an impossible question to answer with any accuracy. Generally speaking, I think that most accounts will experience some level of click fraud, but I assume that isn’t quite as precise an answer as you hoped for!

Google’s approach to handling click fraud is of critical importance to their profits. Being seen as indifferent and dismissive risks advertisers being scared away. Being overly active might also have the same effect, by drawing attention to something that the advertisers haven’t (yet) worried about.

The bottom line is that Google are undoubtedly aware of how widespread click fraud could become, and how damaging that could be for them. Because of this, they are definitely taking active steps to detect and prevent it.

If advertisers lose faith in the AdWords system, they’ll move away en-masse, and I believe that a serious loss in confidence could destroy Google in a matter of months. Ultimately, they have a lot more to lose from click fraud than most of their advertisers.

It’s also worth mentioning that I’ve usually been very impressed at how Google respond to claims of fraud. I have presented them with irrefutable evidence that click fraud took place for one of our clients, and to their credit, they eventually agreed and compensated us more than reasonably.

The bottom line: keep an eye on it, but sleep well at night. Google are doing the same, on both counts.


Question(s): (a) Currently I only run my Adwords in English speaking countries. Do you recommend branching out further and, if so, which countries are amenable to support only in the English language?

(b) I currently split my ads into separate campaigns for U.S. and non-U.S.

English speaking countries. I have found that ads that work well for one don’t always work well for the other. Given question (a), are there further geographic regions you recommend splitting the campaigns across?

(c) I just signed up for Google Checkout and now have the little Checkout logo beneath my Adwords listings. Does it improve or deter click-throughs?

(d): What are the factors you consider when deciding whether to create a new Group or a new Campaign?

Nicholas Hebb – http://www.breezetree.com

Dave: I don’t know which countries are amenable to English language only support, but if a person is searching in English, the odds are probably in your favour. Choose the countries, select your ads to only display in English, and let Google handle the delivery complications.

As to whether you should expand into non-English speaking countries, why not? Our company only works in English, yet we have worked with companies from more than 30 different countries. If there are people in non-English countries searching for what you sell, in English, then why not give it to them? Try it, track your results and decide how to proceed.

As for how to split the campaigns, there are an almost unlimited number of possibilities. The main issue, as always, is time. Bearing in mind you want to track everything you do, try to avoid setting yourself up for data overload.

As for the Google Checkout logo? I have no idea. If it attracts attention then why not? But the advantage (if there is one) may be quite short lived. As an AdWords tactic, it if works, I predict an increasing number of people signing up for Google checkout, which may result in many (or even most) ads soon having that logo. You have to hand it to Google.

To answer your final question, campaigns give far more control than ad groups, but handling twenty campaigns for forty keywords would be somewhat time consuming.

Consider the analogy of a filing cabinet. For obvious reasons you wouldn’t want a separate drawer for every bank account, utility bill, licence, warranty, insurance policy etc. Nor would you want “anything to do with money” in one single folder.

Where budgetary control is needed you want a campaign. Where streamlining is needed, ad groups are the better option. Pick and choose as you see fit, according to your criteria.

Aaron: For questions (a) and (b), I think this boils down to time. In an ideal world, it would be great to have a campaign set up for each language, and each country, and then each of these would be further split into three more campaigns; one for Google search, one for the search partners and one for the content network.

You could go even further with an ad group for each keyword, where ads would be based on that one single keyword. But the time and effort that you would need to manage this would be incredible.

I would be surprised to find that people in Germany, France or China do not perform searches for flowcharting software in English. If your ads are not being displayed to those countries, you may be missing out on sales opportunities.

For your question on when to make a campaign and when to make an ad group, it’s all about control and time. Campaigns give you all the control, while ad groups offer flexibility through shared control. At the campaign level, you can choose your budget, the languages, geographic region, the various networks and more. At the ad group level, you share with all other groups within that campaign.

Let’s say you have one campaign where you have chosen the Google search, search partners and content network. You will not be able to focus 75% of your daily budget on the Google search and search partners and have only 25% of the daily budget for the content network. The only way to set separate budgets would be to have separate campaigns for each.

The problem with separation is time. The more campaigns, the more ad groups, and the more time it takes to manage your account. Finding the right balance is key.


Dave Collins is the CEO of SharewarePromotions http://www.sharewarepromotions.com, a well established UK-based software marketing company. Dave specialises in Google AdWords, Log Analysis, Online Marketing and Delegation.

[Editor Note: Dave Collins, noted UK micro-ISV marketing expert, is sharing his considerable expertise on marketing, SEO, Google AdWords and more on Fridays at MyMicroISV. Thanks Dave!]

[tags] Dave Collins, microISV, AdWords[/tags]

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Bob WalshGoogle AdWords Q & A

Keep and eye on this guy…

Nick Brawn launched his microISV product, Shinobi Scanner, last week for the Mac OS, and already he’s passing on info you can use in your company:

  • Cut, cut, cut to get 1.0 out the door: If it isn’t essential, leave it out.
  • Don’t call it 1.0 Beta if you’re going to release 1.1 next. Just call it 1.0.
  • Everybody loves screenshots: My screenshots page has the most hits so far.
  • Don’t be afraid of getting feedback. Be afraid of getting NO feedback.
  • Figure out the biggest point-of-pain and document it.

Nick’s off to a great start – and I’m keeping my eye on him because he’s good good information to share at his blog.

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Bob WalshKeep and eye on this guy…

Office Live might be for you.

za101996991033.gifI spent the day yesterday getting the lowdown on Microsoft Office Live from Don Campbell, Microsoft’s OL evangelist – there’s definitely two potential opportunities there for microISVs. Office Live has nothing whatsoever to do with Excel and Word online – it’s Microsoft’s play to be an ISP for reluctant adopter small businesses who are now getting around to be building some sort of web presence for themselves – about 10 million in the US alone.

Since November, about 400,000 have taken Microsoft up on its offer of free web hosting and domain name registration, ultra-easy web site design via the slickest template system I’ve ever seen and the ability to build simple work flows (submit a reservation for the B & B from its OL site and when the proprietor approves it out goes the confirmation email, the time is booked out in an online calendar and an invoice created in Word 2007.)


There’s some higher end stuff you can get into here too: the ability to host mashups, to call Office Live via web services from your .NET/WPF/Silverlight application, the ability to build some rather sophisticated work flows for clients you might garner from the OL world.

You can sign up for free (80% of that 400,000 did just that), or up the ante to $19.95 or $39.95 a month. What you get for your money includes online document collaboration (works in Office 2003, much slicker in Office 2007), email accounts, more space, more company users.

So why should you as a microISV care?

  • If you sell a product or service (say web design), you can access a nice size pool of prospective customers who haven’t bought into anyone else’s way of doing business for the price of setting up a free account and populating a profile page at the Office Live Marketplace.
  • If you want to go a step further and provide your service inside the Office Live biodome, you can, and since Microsoft is eagerly looking for partners small and large to do just that, you will get prominent play. For example, there’s a company called Ring Central that sells an interesting virtual PBX service that has made its HTML badge available in Office Live – add it to your site and when customers click it Ring Central calls both them and you – and you can define which number to call at what time, who to call, etc. I can see microISVs like InvoicePlace taking advantage of this.
  • If you do consulting and/or sell products and you want someone else to manage the plumbing, Office Live may in the future (early 2008) be the right place for you. But two key components – a registration system for your customers/clients and an ecommerce module are not there yet.

All in all, Office Live has some interesting possibilities for microISVs selling to micro businesses – check it out. Here’s some links Don Campbell forwarded:

Office Live Developer Portal (Mashups and code samples are here)

Office Live Marketplace

Developer Screencasts on Channel 9

Mix 07 Presentation/Demo Recording (including a good PowerPoint overview of Office Live)

Don Campbell’s Blog (He blogs about Office Live topics, including some of the ways you can use JavaScript within the Office Live framework.)

[tags]Office Live, microISVs[/tags]

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Bob WalshOffice Live might be for you.